Germany plans to offer generous tax incentives to pensioners who continue working beyond the state retirement age.
Recent reports revealed that the government is planning a law to offer a tax breaks of up to 45% to encourage people aged 66 and older to keep working.
As per multiple reports, under the proposed "aktivrente" plan, people could earn up to £1,750 a month tax-free even while receiving their state pension.
The measure is part of the government efforts to boost investments and tackle Germany's slow economy.
Germany has an aging population due to sharp drop in birth rates in the 1960s and 19702.
By 2029, over 13 million people are expected to be above the state pension age.
This situation is creating severe economic and social challenges for the country.
CDU general secretary Carsten Linnemann told Reuters, “We want to make working in old age more attractive. We want the active pension to help combat the shortage of skilled workers.”
Meanwhile, Gerard Lyons, of wealth managers Netwealth, said in a statement, noting, “The German approach provides a strong incentive for able pensioners to remain working. It’s worth considering here," as per ExpressUK.
At the same time, experts caution that it won't completely fix the country's economic challenges.
Professor Peter Haan said that for older people to work longer, Germany needs better health, education and suitable jobs, since many cannot continue working due to poor health or heavy workload issues.
He also mentioned that expecting to work longer might reduce younger people’s private pension savings, but he believes this effect would be minor.
